The main problem is that the engine is mounted longitudinally, rather than transversely like in Jettas and Golfs.  This means that the exhaust and intake are specific to the Fox (and older Volkswagens like the B1, B2, and other BX-based cars).

Having said this, though, there are Foxes out there running on more than the stock 1.8L 8v engines.

I'll try to get more information on these, but it isn't easy come across information on this.  From what I've heard, here are engines that have been swapped into Foxes (all referring to VW engines):

• 1.8L 16v
• stock Fox 1.8L block with Jetta 16v head
• 4-door race-modified Fox
• Scirocco 1.8L 16v with transmission
• This was in a Fox wagon
• 2.0L 8v
• 2.0L 16v
• Passat V6 twin turbo with Quantum Synchro system (this is a 300-400 HP rally Fox)
• Fox wagon
• 2.0L carburated Santana engine (into a Brazilian 1983 VW Voyage)
• 2-door sedan
• I've heard rumours that someone has swapped in an Audi I-5 engine
• For this to work, the front of the engine bay would have to be extended, which is definitely not worth the time and money involved.

.

• How much power you want to get out of the new engine
• How much work you're willing to put in or pay for
• How much money you have

1.8L 8v

• These engines are exactly the same size as the stock Fox engine and you will have no clearance problems whatsoever.  In order for this to be worthwhile, the engine should come out of a Golf GTI or Jetta GLI, so that it will have a more power than the Fox engine.

• This engine should also fit right in without major problems.  But you will have problems with the exhaust - the exhaust manifold is different than on 8v engines, which means than the VW Dasher/Audi Fox manifold upgrade won't work.  The stock 16v exhaust manifold should fit, but you'll need a custom downpipe to connect it to the rest of the exhaust.  The intake manifold might also pose a problem, as it will either point directly at the battery, or at the radiator support.
• Keep in mind, that a 16v engine requires more maintenance, and it costs about twice as much to modify one when compared to an 8v.
• Installing a 16v head on the Fox's stock 1.8L bottom end has been done, but it is a LOT of work!  The coolant channels do not line up between the 8v and 16v heads, and there are many more areas where custom work has to be done.  It is not recommended to duplicate this.
• Overall, 16v is not the way to go in a Fox, due to the fabrication involved.  With the money you would spend on making a custom exhaust manifold and/or downpipe, you can build an 8v to have as much, if not more power than a stock 16v.

• I have no info on this one yet, but it seems that it's the same size as all of VW's 1.8L engines, so it should fit right in.  Audi A4s and VW Passats have a longitudinal 1.8T.

• Audi 80 2.0L 8v aka "Bubbleblock" [engine code 3A]
• This seems to be the best choice for a combination of good power, ease of installation and price.  The Audi 80's 2.0L 8v is the only of VAG's 2.0L engines that isn't taller than the 1.8L ones.  This means that it will bolt right up in the Fox's engine bay.  It also uses CIS-E fuel injection, so it should not be too difficult to get it working.  You may even be able to use to stock Audi 80 exhaust manifold and dual downpipe, but I'm not certain.  On an Audi 80 engine, the fuel injectors are in the intake manifold, and not in the head.
• 2.0L 8v aka "Tallblock"
• This is what all other VW 2.0L engines are - they are 16mm taller than the 1.8L ones.  This means that you could run into clearance problems on the underside of the hood.
• This upgrade has, however, been done in 2 Foxes that I know of.  About the only drawback I've heard about using this engine, is that it is not as quick to rev as the Audi 2.0.

• This should be possible to do with enough time and money, with emphasis on money.  Since Foxes never came with VR6s, custom mounts and just about everything else will have to be fabricated.  Furthermore, it is highly doubtful that a stock longitudinal transmission can take that much power.

• Maybe.  I only assume you'd also have to use the stock W8 transmission to handle the 275 stock HP.

• This would make the Fox even more fuel efficient, but I have never heard of anyone completing it.

• Remove the restrictive gasket in the exhaust.
• Get a good cat-back exhaust system (2.0" is fine even for a 2.0L, I recommend the Techtonics system).
• Get a dual-outlet exhaust manifold + corresponding downpipe, and a high-flow catalytic converter (all can be had from Techtonics as well).  An Audi 80 exhaust manifold and downpipe will provide the best flow, but whether it'll fit is uncertain.
• If you have a 1987-1990 Fox, upgrade to the intake manifold and throttle body off a 1991-1993 Fox.
• Get a 5-speed transmission, if not already there.  The VW Quantum turbo diesel (code 3M / 9Q) is the best one to get due to its gearing.  The Audi 4000 2P is a close second, but its 5th gear will have high RPMs on the highway.  The stock Fox 5-speed is the same as the Audi 4000 2N, and is still a definite improvement over the stock 4-speed.
• Get a sport camshaft.  Here you will have to decide whether you will stick with the stock hydraulic lifters, or end up getting/building a solid-lifter cylinder head.  For maintenance-free operation, stay with hydraulic lifters, but if you want to end up running a really wild camshaft, you'll have to switch to solid lifters.  Get an adjustable cam gear with it, to control where the powerband will lie.
• Remove rev limiter (only possible on 1987-1990 Foxes).
• Get more fuel to the engine (4.0 bar fuel pressure regulator on 1991-1993 Foxes).
• Getting a cone-style air filter may help a bit (only possible on 1991-1993 Foxes), as long as you get cold air to it.  On 1987-1990 cars, get a drop-in K&N panel filter.  Drilling holes in the airbox will help a bit, but don't expect any noticeable gains in power.
• Build a cylinder head.  Budget will dictate what you can do - oversized valves, port and polish, cc'ing, decking, sport valve springs, and so on.
• More displacement.  A 2.0L high compression block will yield some very noticeable power.
• After all of this, you can do some more shaving of the head (and block) for even higher compression, a wilder camshaft, cold air intake with an intake manifold spacer, play around with the mixture, and ignition- and camshaft timing, stiffer engine mounts, suspension, a lighter flywheel, lightened crankshaft, smaller-diameter tires, etc..

Thanks for David Marshall, Philip Amshad, Peter Woodbury and others for telling me about the engine swaps.  If anyone wants to donate an engine to me for a project Fox, feel free to do so :)